ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 284
(Senators Minard and Kessler, original sponsors)
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[Passed April 7, 2009; in effect ninety days from passage.]
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AN ACT to amend and reenact §33-13C-3 and §33-13C-16 of the Code of
West Virginia, 1931, as amended, all relating to viatical
settlements; adding alternative means for satisfying financial
requirements for the licensing of viatical settlement
providers and brokers; and making criminal provisions
applicable to any person violating the Viatical Settlements
Act.
Be it enacted by the Legislature of West Virginia:
That §33-13C-3 and §33-13C-16 of the Code of West Virginia,
1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 13C. VIATICAL SETTLEMENTS ACT.
§33-13C-3. License and bond requirements.
(a) (1) A person may not operate as a viatical settlement
provider or viatical settlement broker without first obtaining a
license from the commissioner.
(2) (A) An insurance producer who is authorized to sell life insurance in this state pursuant to a resident or nonresident
license issued in accordance with the provisions of article twelve
of this chapter may operate as a viatical settlement broker without
obtaining a license pursuant to this section if the viatical
settlement activities of the producer are incidental to the
producer's insurance business activities.
(B) The insurer that issued the policy being viaticated is not
responsible for any act or omission of a viatical settlement broker
or viatical settlement provider arising out of or in connection
with the viatical settlement transaction, unless the insurer
receives compensation for the placement of a viatical settlement
contract from the viatical settlement provider or viatical
settlement broker in connection with the viatical settlement
contract.
(3) A person licensed as an attorney, certified public
accountant or financial planner accredited by a nationally
recognized accreditation agency who is retained to represent the
viator, whose compensation is not paid directly or indirectly by
the viatical settlement provider, may negotiate viatical settlement
contracts on behalf of the viator without having to obtain a
license as a viatical settlement broker.
(b) Application for a viatical settlement provider or viatical
settlement broker license and for renewals of the licenses shall be
made in the manner prescribed by the commissioner and shall be
accompanied by fees established in legislative rules, including
emergency rules, promulgated by the commissioner.
(c) The commissioner has the authority, at any time, to
require the applicant to fully disclose the identity of all
stockholders, partners, officers, members and employees and the
commissioner may, in the exercise of the commissioner's discretion,
refuse to issue a license in the name of a legal entity if not
satisfied that any officer, employee, stockholder, partner or
member of the entity who may materially influence the applicant's
conduct meets the standards of this article.
(d) The commissioner shall make an investigation of each
applicant and issue a license if the commissioner finds that the
applicant:
(1) If a viatical settlement provider, has provided a detailed
plan of operation;
(2) Is competent and trustworthy and acts in good faith in the
capacity of a licensee;
(3) Has a good business reputation and is qualified by
experience, training or education as a viatical settlement provider
or broker;
(4) Has demonstrated evidence of financial responsibility, in
a format prescribed by the commissioner, by possessing a minimum
equity of not less than $250,000 in cash or cash equivalents
reflected in the applicant's audited financial statements or
through a surety bond executed and issued by an insurer authorized
to issue surety bonds in this state in the amount of $250,000:
Provided, That the commissioner may permit an applicant for a
broker's license to demonstrate evidence of financial responsibility through a policy of insurance covering legal
liability resulting from erroneous acts or failure to act in their
capacity as a viatical settlement broker and inuring to the benefit
of any aggrieved party as the result of any single occurrence in
the sum of not less than $100,000 and $300,000 in the aggregate for
all occurrences within one year. Any surety bond issued pursuant
to this subdivision shall be in the favor of this state and shall
specifically authorize recovery by the commissioner on behalf of
any person in this state who sustained damages as the result of
erroneous acts, failure to act, conviction of fraud or conviction
of unfair practices by the viatical settlement provider or viatical
settlement broker. The commissioner shall accept, as evidence of
financial responsibility, proof that financial instruments in
accordance with the requirements in this paragraph have been filed
with a state in which the applicant is licensed as a viatical
settlement provider or viatical settlement broker. The
commissioner may ask for evidence of financial responsibility at
any time he or she considers it necessary.
(5) If a legal entity has provided a certificate of good
standing from the state of its domicile; and
(6) Has provided an antifraud plan that meets the requirements
of subsection (g), section fourteen of this article.
(e) The commissioner may not issue a license to a nonresident
applicant unless the applicant files with the commissioner either
a written designation of an agent for service of process or the
applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of
process on the commissioner.
(f) A viatical settlement provider or viatical settlement
broker shall provide to the commissioner new or revised information
about officers, ten percent or more stockholders, partners,
directors, members or designated employees within thirty days of
the change.
(g) An individual licensed as a viatical settlement broker
shall complete on a biennial basis fifteen hours of training
related to viatical settlements and viatical settlement
transactions as required by the commissioner. A life insurance
producer operating as a viatical settlement broker pursuant to
subdivision (2), subsection (a) of this section is not subject to
the requirements of this subsection. Any person failing to meet
the requirements of this subsection is subject to the penalties
imposed by the commissioner.
§33-13C-16. Criminal penalties.
(a) A person convicted of a fraudulent viatical settlement act
is guilty of a felony and, upon conviction thereof, shall be
sentenced as follows:
(1) Imprisonment in a state correctional facility for not more
than twenty years or payment of a fine of not more than $100,000,
or both, if the value of the viatical settlement contract is more
than $35,000;
(2) Imprisonment in a state correctional facility for not more
than ten years or to payment of a fine of not more than $20,000, or both, if the value of the viatical settlement contract is more than
$2,500, but not more than $35,000;
(3) Imprisonment in a state correctional facility for not more
than five years or payment of a fine of not more than $10,000, or
both, if the value of the viatical settlement contract is more than
$500, but not more than $2,500.
(b) Any person who violates any other provision of this
article is guilty of a misdemeanor and, upon conviction thereof,
shall be fined not more than $1,000 or confined in jail not more
than one year, or both fined and confined.